London’s Knightsbridge area is one of those that has attracted Greek buyers.
The U.K. has a record budget deficit, weak economic growth and may soon face a hung parliament. For wealthy Greeks, it’s a safe haven. Greek buyers now account for 6 percent of all purchases of London properties costing more than 2 million pounds ($3 million), double the average of the past three years, as they try to protect their assets from the country’s debt crisis, London-based Knight Frank said in an e-mailed statement today.
“There has been a real trend for wealthy Greek families to invest in U.K. property for a variety of reasons, but the safe haven driver is a big one,” Rupert des Forges, a partner in Knight Frank’s Knightsbridge office, said in the statement. “Greek buyers have been especially active and have been competing hard for the limited number of high-quality properties currently available.”
A shortage of luxury homes for sale and a surge of overseas buyers lured by a weaker pound have helped London’s prime real estate market recover from the global recession. Prices of houses and apartments costing more than 1 million pounds rose 21 percent in April from a year earlier, Knight Frank said. That’s the biggest annual gain since February 2008.
Workers in Greece, from gas station operators to air- traffic controllers, staged a general strike today in response to the government’s decision to cut wages and pensions and raise taxes in return for a 110 billion-euro ($143 billion) rescue package.
The debt crisis is prompting other European buyers to show more interest in the London property market, Knight Frank said. Russians and Italians account for more than a quarter of all purchasers on homes costing more than two million pounds, and about 2,000 homes in that price bracket were sold in the past six months, the broker said.
“There does seem to have been a positive impact on the London market from the current euro-zone sovereign debt crisis, with European buyers becoming much more active,” Liam Bailey, head of residential research, said in the statement. “With the current crisis focused on Greece, there has been a direct impact in terms of demand from this source.”
The drop in the pound against the euro over the past two years helped create the best buying opportunity in London for the past 10 to 15 years, des Forges said, citing a Greek buyer of a Chelsea house who he declined to identify. Luxury-home prices increased 1.3 percent during April. Sales by volume increased 18 percent from a year earlier.
Uncertainty over which political party will win the U.K. election tomorrow contributed to a 23 percent decline in transactions in April from March, Knight Frank said. The U.K. economy will grow by 1.2 percent this year, according to European Commission estimates.